Goldman Sachs is wary of Chinese tech giant Tencent Holdings, removing it from its “preferred list” in the Asia-Pacific region. The company was included on the U.S. Department of Defense’s list of “Chinese military industrial enterprises” on January 7. Indirect procurement begins in January 2027, pursuant to the National Defense Authorization Act for Fiscal Year 2024. Goldman Sachs also removed Japan’s Sumitomo Mitsui Financial Group and China’s Sungrow from its list of Asian convictions in January, and added Kotobuki Spirits, JD.com and Iluka Resources. The stocks appear on the investment bank’s “Conviction List – Director’s Cut,” which it says provides a “curated and active” list of Buy-rated stocks. Goldman Sachs said they were selected by a subcommittee in each region that “works with analysts in each industry to identify the best ideas that combine conviction, differentiated views and high risk-adjusted returns.” Kotobuki Spirits Goldman Sachs likes Kotobuki Spirits because of its “strong growth driven by the power of its brand.” The company produces high-quality candies that are often sold in airports, department stores, train stations and other high-traffic locations. Goldman Sachs analyst Norihiro Miyazaki predicts that inbound sales will grow by at least 30% in the next few years due to “an increase in the total number of inbound tourists in Japan, as well as sales growth due to the expansion of the regional airport (Fukuoka). Arrivals at the airport in March 2025, 2026 Arriving at Kansai International Airport in the summer), the analyst also pointed out that prices of Kotobuki’s major brands have increased by 30% to 40% over the past 10 years, adding that this is its “strong price” during Japan’s deflation period. A sign of control. The company’s shares, listed on the Tokyo Stock Exchange, have fallen nearly 2.9% in the past 12 months. Goldman Sachs’ 12-month price target for the stock is 2,800 yen ($17.71), implying a potential upside of 37.9%. JD.com Goldman Sachs also added Chinese e-commerce company JD.com to the list, citing factors such as a rebound in growth and “significant scope for further revaluation.” Ronald Keung, an analyst at the bank, said the re-rating will be supported by factors such as “the visibility of accelerated revenue growth in the fourth quarter of 2024”, policy support measures and reduced procurement costs. JD.com’s shares are listed on the Hong Kong Exchange and trade in the United States as American Depositary Receipts under the stock symbol JD. Goldman Sachs’ 12-month price target for the stock is HK$181 (US$23.27), implying a potential upside of 34.1%. Iluka Resources Australian miner Iluka Resources is also on Goldman’s list, thanks to its “compelling (free cash flow) story” and “rare earths growth potential.” Analyst Paul Yong noted that the company has a 30% market share in the production of zircon, which is used to make ceramics and chemicals. This makes it “the largest zircon producer in the world,” he said, adding that the top three global producers have a market share of about 65%. He added that the company is also “a significant producer of advanced titanium dioxide raw materials” used in paints. Yong is optimistic about Iluka’s project pipeline and predicts its EBITDA (earnings before interest, depreciation, taxes, depreciation and amortization) will double by 2028. It trades in the form of ADR and the stock code is Ilkay. Goldman Sachs has a price target of A$7.70 (US$4.79) on the stock, implying an upside potential of nearly 50%. —CNBC’s Michael Bloom contributed to this report.
